2023-07-06 11:30:58 ET
Affirm Holdings ( NASDAQ: AFRM ) will phase out its Returnly returns management business and transition its customers to Loop Returns, a rival backed by ecommerce company Shopify ( SHOP ), by early October, the companies said Thursday.
Returnly was acquired by Affirm ( AFRM ) in May 2021 in a cash and stock deal valued at some $300M. The move sought to "help merchants remove friction from returns, drive loyalty, and retain more customers," typically through software that offers store credit, AFRM CEO and Founder Max Levchin had said.
The move to divest Returnly comes as AFRM has been focused on cost-cutting measures as rising interest rates weighed on its business, in that it became more expensive to fund its installment loans. Earlier, Piper Sandler analyst Kevin Barker downgraded AFRM on expectations that high interest rates and competition will pressure its operating margins.
In addition, Affirm ( AFRM ), known for its Buy Now, Pay Later platform, will take an equity investment in Loop, The Information reported , citing people familiar with the matter.
AFRM, meantime, dropped 15.8% in late morning trading.
More on Affirm Holdings:
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Affirm: A Brilliant Business Model Atop A Giant Net Liquidity Position
- Affirm: Buy Now, Pay The Price Later
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Affirm to wind down Returnly returns management service